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Leela Ship Recycling yard

Ship recycling – early signs of fresh activity

Exploratory discussions on new deals are providing early indications that recycling markets in India, Bangladesh, Pakistan and Turkey could reopen for business soon, perhaps even by June.

However, anchoring and beaching permissions are not being given for ships with foreign crews although some are being allowed to disembark in Bangladesh provided special permissions are granted by police and immigration authorities. Flying domestic crews overseas to take over ships bought “as is” is not yet possible either since all international flights out of the subcontinent are cancelled.

In its latest weekly report, cash buyer GMS suggested that the prospect of subcontinent markets opening by June has motivated buyers to take speculative positions on new acquisitions. When the markets do open, however, shipowners will have to brace themselves for significantly lower prices. Despite a move by the UAE to ban exports of steel scrap for four months and Indian Prime Minister Narendra Modi’s recent economic stimulus package, typical prices have fallen by about 20% over the last two months.

Indicative price levels in India are estimated by GMS at $300 per ldt for bulk carriers, $320 for tankers and $330 for container ships. The company’s figures are $10 less across the board in Bangladesh and $20 less in Pakistan. Indicative prices in the Turkish market are around $160 for bulkers and $170 for tankers and container ships.

Meanwhile special beaching permissions are being granted for vessels at the Chattogram anchorage in Bangladesh as cyclone Amphan is due to hit on Wednesday. The vessels at the anchorage include the 298,450 dwt very large ore carrier Stellar Rio (46,226 ldt, 1994) and two Capesize bulk carriers, thought to be sisters, the 172,502 dwt Berge Aoraki (21,285 ldt, 2000) and the 172,566 dwt Cape Stefanie (21,221 ldt, 1999).

Together with four smaller bulk carriers and a container ship, these vessels have all been anchored at Chattogram since late March and their owners are therefore likely to face lower prices when the deals are finally done.   

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